A comprehensive
Foreign Trade Policy (FTP) for 2004-09 was announced
on 31st August, 2004 and its Annual Supplement
for the year 2007-08 was released on 19th April,
2007. The basic objective of this policy is to
double the merchandise exports by 2009 and to
make exports an effective instrument of economic
growth by giving thrust to employment generation
particularly in semi urban and rural areas through
a number of policy initiatives. These include
simplification of procedures, reduction in transaction
cost, neutralisation of incidence of levies and
duties on inputs used for exports and development
of global hubs for manufacturing, trading and
services. Keeping in view the interests of the
domestic entrepreneur, farmers, traders as well
as India's international commitments and bilateral
treaties, amendments/changes in policy are made
from time to time as and when these become necessary
in public interest.

Stability of policy regime has
yielded positive results and India's merchandise
exports is expected to surpass the objective of
doubling by 2009. Some of the major initiatives
taken recently, including measures announced in
the Annual Supplement to FTP in April, 2007 are
given below:

The Union Minister for Commerce
& Industry addressing at the release of Annual
Supplement to the Foreign Trade Policy 2004-09,
in New Delhi on April 19, 2007.

Focus Market
Scheme and Focus Product Scheme

The Focus Market Scheme was introduced
with effect from 1.4.2006 with a view to offsetting
the high freight cost and other disabilities faced
in accessing select international markets. The
scheme allowed duty credit facility @ 2.5 per
cent of the FOB value of exports of all products
to the notified countries. In order to give further
thrust to the Focus Market Scheme, 16 additional
markets have been notified/ clarified during the
year which shall be entitled for duty credit scrip
on export with effect from 1.4.2007. In total,
57 markets are covered under the scheme. The scheme
had enhanced India's export competitiveness in
these regions.

The Focus Product Scheme was
introduced with effect from 1.4.2006. It provides
incentives for export of products which have high
employment potential in rural and semi urban areas
with a view to offset the inherent infrastructure
bottlenecks and other associated costs involved
in marketing of such products. The scheme allowed
duty credit facility @ 1.5 per cent of the FOB
value of exports of notified products, such as
value added fish and leather products, stationery
items, fireworks, sports goods, handloom products
bearing handloom mark and handicraft items. In
order to give further thrust to the Focus Product
Scheme, 19 additional products have been notified/
clarified during the year which shall be entitled
for duty credit scrip on export with effect from
1.4.2007. In total, 103 products are covered under
the scheme. In addition to this, 2 more products
have also been added/ notified during the year
under the High Tech Products Scheme which is a
part of Focus Product Scheme.

The scrip and the items imported
against the Focus Market Scheme and Focus Product
Scheme are eely transferable. The duty credit,
thus obtained may be used for import of inputs
or goods including capital goods provided the
same is freely importable under ITC (HS), except
a small list of items contained in Appendix 37B.

Vishesh
Krishi and Gram Udyog Yojna

With a view to promote employment
generation in rural and semi urban areas, the
export of Gram Udyog products i.e. village and
cottage industry products has been incentivised
by awarding a duty credit scrip @ 5 per cent of
FOB value of exports under the expanded Vishesh
Krishi and Gram Udyog Yojna. However, the duty
credit scrip is being granted only at a reduced
rate of 3.5 per cent of the FOB value of exports,
in cases where the exporter has availed the benefits
under Chapter 4 of this Policy, for import of
agriculture inputs (other than catalysts, consumable
and packing materials) relating to the export
item under this scheme. The certificate/scrip
can be used for import of all freely importable
items, except such items as notified by the government
in Appendix 37B. The scrip and the items imported
against it are freely transferable. In order to
give further thrust to the scheme, 153 new products
have been notified to be eligible for benefit
under the Scheme w.e.f. 1.4.2007. In terms of
value of duty credit scrip issued, there has been
an increase to the extent of Rs.299.64 crore during
2006-07 over the previous year, thus registering
an annual growth rate of 113.564 per cent.

Exporters have the option to
avail of the benefits in respect of the same exported
product(s) under only one of the above three schemes
i.e. the Focus Market Scheme, the Focus Product
Scheme or the Vishesh Krishi and Gram Udyog Yojna.

Gems &
Jewellery Sector

With a view to give competitive
edge and also to sharpen the core strength of
the promising gems and jewellery sectors and the
handicraft sector, duty free access to tools,
machinery and equipment has been provided. Export
of rhodium polished silver jewellery has been
encouraged further by way of enhanced entitlement
of duty free consumables to 3% which would compensate
the price rise of rhodium, an essential ingredient
for polishing. To reduce the transaction cost
for the diamond sector, testing facility at Dubai
has been incorporated in the list of certifying
agencies.

Duty
Neutralisation Scheme

Developers and Co-Developer of
Special Economic Zones have been notified for
benefits under all duty neutralisation schemes
like Duty Entitlement Pass Book (DEPB), Duty Free
Import Authorisation Scheme (DFIA) and Advance
Authorisation Schemes.

Duty Free
Import Authorisation Scheme (DFIA)

A new Scheme called DFIA was
made effective from 1.5.2006. It offers duty free
imports for exports and transferability of scrip
or the imported inputs, once the export obligation
is completed. This scheme has undergone changes,
making it more user friendly both in terms of
procedural simplification and reduce interface
with the government authorities.

Duty Entitlement Pass Book (DEPB)
Scheme

The scheme shall continue till
31.3.2008. Facility of Brand Rate for customs
duty on fuel, which remained un-rebated under
the scheme and the 4 per cent Special Additional
Duty was introduced under the scheme. DEPB rates
of 9 product sectors were enhanced by 3 per cent
and for the rest by 2 per cent w.e.f 1.4.07 so
as to adjust for reduced value addition, rupee
appreciation etc. The enhanced rates for 47 entries
were slightly reduced w.e.f. 9.10.2007, though
still higher than the rates which were prevalent
before 1.4.2007. Formulation of a new scheme for
rebating the State Indirect Taxes on exports is
under consideration.

Service Tax on Exports

Government has announced in principle,
that exporters should only export goods and not
the taxes and duties thereon. In line with this,
services rendered abroad and charged on exports
from India, would be exempted from Service Tax.
The Department of Revenue has been requested to
expedite the issuance of corresponding Notification.

Service tax on services rendered
in India and utilized by exporters would be exempted/
remitted. While the Department of Revenue have
issued Notification allowing refund of service
tax on 10 services, remission mechanism for the
balance services is being institutionalized, by
way of working out of modalities.

With a view to reduce transaction time
and cost, the Requirement of double verification
process at customs under EPCG and Advance
Authorization scheme has been done away. Now
onwards, if required, random verification
will be resorted to.

Limit prescribed for procurement
and export of spares/components under the
Foreign Trade Policy has been enhanced from
1.5 per cent of FOB value of exports to 5
per cent, subject to the condition that it
shall not count for NFE and direct tax benefits.
The earlier condition of export of spares/components
within the warranty period of the export article
has been done away with.

The requirement of permission
from the Development Commissioner/Custom Authorities
when part of the production process is sub-contracted
abroad and goods are exported from the premises
of the sub-contractor abroad, has been removed.

Units having Premier Trading
House status have been allowed the option
to undertake DTA sales on monthly basis, besides
quarterly, half-yearly or annual basis, as
allowed to other units

Detailed Guidelines for conversion
of DTA units into EOU/EHTP/STP/BTP unit have
been incorporated in the Appendix 14-I-O in
Handbook of Procedures.

The general provisions in
para 9.3 and 9.4 of Handbook of Procedures,
regarding applications received after expiry
of prescribed date of receipt and supplementary
claims have been made applicable for CST refunds
to these units.

Deemed export

The time limit for claiming deemed
export benefits has been enhanced from 6 months
to 12 months from the date of payment. These claims
can be filed Invalidation Letter/ARO wise, against
individual licences, within the time limit as
specified above. 100% TED refund will be allowed
after 100% surplus have been made physically and
payment received up to 90%.

Electronic
Data Interchange (EDI) Initiatives

The following Electronic Data Interchange (EDI)
initiatives are being undertaken with a view to
implify procedures relating to international trade
and to put in place an exporter friendly regime
for obtaining import authorizations under various
Export Promotion Schemes:

Bring all the community partners
dealing with international trade on an EDI
enabled platform to reduce transaction costs.

Extend the online web enabled
application procedure for issue of licence/
authorization to all categories of licences/
authorization;

Consolidate the message exchange
system with Customs and extend its scope to
cover all shipping Bills relating to different
export promotion schemes.

Doing away with the manual
double verification of the authorization system
by way of online validation with the Customs
Authority, initially for the ports having
EDI facility.

Grievance Redressal
Committee

A Grievance Redressal Committee
(GRC) headed by the Additional Secretary, Department
of Commerce has since been set up to handle grievances
of exporters against decisions of the DGFT relating
to Trade and Policy. The Exporters shall send
their grievances to the Committee in Electronic
form, besides all other normal modes. Representations
to the Committee may be forwarded by post addressed
to the Chairman of the Committee. The application
of the aggrieved party must contain the name of
the applicant, IEC No., address (with contact
Nos. and e-mail ID), the details of reference
earlier made to DGFT, if any and the grounds in
support of grievances, in brief. Any decision
relating to Foreign Trade i.e. decisions of ALC,
EPCG, PIC, PRC, EPZ/EOU etc. i.e. all non-statutory
matters relating to

Foreign Trade Policy which has
caused grievances to the exporter/importer will
be heard by the Committee. Thereafter, Grievance
Committee functioning in DGFT may be approached
in the first instance for redressal of the grievances.
The petitioner may thereafter refer the matter
to GRC if still aggrieved with the decision of
the Grievance Committee of DGFT. The Committee
would also afford a personal hearing to the petitioner
to redress the grievance by considering applications
in its meetings. The petitioners would be able
to see the minutes of the meeting on the website
of the Department of Commerce (http://commerce.gov.in).
During the period April-December 2007, the Grievance
Redressal Committee met 6 (six) times wherein
85 cases were considered and disposed off.

Import of rice in India allowed
subject to the condition that the exporter
is able to furnish a certificate from the
concerned Government authorities that the
exported rice is GM free. [Notification No.13
dated 10.7.2007]

Import of dolomite and limestone
of a size higher than one cubic feet has been
restricted. [Notification No.17 dated 26.7.2007]

MMTC Limited and TANCEM Limited
were permitted to import cement without standard
mark from such foreign manufacturers who have
applied for registration with Bureau of Indian
Standards. [Notification No.23 dated 14.8.2007]

Import of wheat has been
made free till further orders. [Notification
No.35 dated 8.10.2007]

Import of palm oil through
port in Kerala has been restricted. [Notification
No.39 dated 16.10.2007]

In addition to import of
eligible shooters, import of 0.177 bore air
guns and air pistols allowed freely by National
Rifle Association of India (NRAI). [Notification
No.52 dated 21.11.2007]

The list of items where mandatory
BIS standards is required for imports has
been amended. The present list includes 68
items. [Notification No.53 dated 21.11.2007]

Conditions have been imposed
on import of certain chemicals as per Chemical
Weapon Convention [Notification No.59 dated
30.11.2007].

Trends
of Authorizations issued under Export Promotion
& Duty Neutralization Schemes during the period
April-December, 2007

During the period April-December 2007, a total
of 1,12,386 authorisations having CIF/ Duty credit
value of Rs. 1,32,489 crore and FOB/ Export Obligation
of Rs. 3,35,854 crore have been issued which represents
downfall of 18% in number, 14% in CIF/ Duty credit
value and 4% in FOB value/ Export Obligation over
the corresponding period of last year. However,
category wise, pattern of issuance of authorisations
during the period remained the same as in the
corresponding period of last year. A Statement
on total number of authorizations issued and their
CIF/ Duty Credit & FOB during April-December,
2007 and the corresponding period of last year
is given in the Table-5.1.

A comparative picture of authorizations
issued & their import value during the period
April-December for the year 2006 and 2007 is depicted
through Charts-5.1 & 5.2. The percentage share
of import authorizations issued and their value
by Category during April-December, 2007 is depicted
through Charts 5.3 & 5.4.